Is Austerity a Cure for Europe's Troubles?

11/8/2011 8:18AM

Austerity has long been seen as the solution to the euro-zone debt crisis. But as demand across the whole region slumps, with even German growth starting to falter, doubts are rising over whether this really is a cure all.

This transcript has been automatically generated and may not be 100% accurate.

I ... still it is on BBC this solution to the euro zone debt crisis ... that has economists across the region stocks slump and quilting tally is starting to fall to ... the already starting to rise in prices is not the cure all off rule ... discusses with me is rigid body had on the Street columnist for The will Street gentle ... rigid up but stocks isn't really a case had that confidence in the whole EU is known ... to discount all of that ... it seems like it if you look what's happening to yields across the euro zone in Italian yields or a new high ... Jim mules up close to NewLead ... and what was even more is that Jim and yields are actually starting to outperform ... some of the European Omstrom such as EIB ... EFSF ... the European Union the Soviet that having trouble actually raising funds yesterday so so it's it's it's a case that ... this opened the money ... out of the peripherals ... to things like Germany and on the Gemini institution's absolutely yet what does this mean in the long run that means that high ... when in fact you don't ... negotiations ongoing this seemed to be increased hopes that there was good to be a solution now ... I mean you have to keep Greece Greece is actually change his government ... believes that the Italians can change the government on ... the scene austerity measures and prawns ... Weisel is improving ... think of basic problem with timing ... so the austerity is necessary in the near term in order to prevent markets from blowing off of it ... because they're worried that budget deficits are unsustainable ... and the debt will rise further ... in the near term that will hurt growth ... and so you will bowl the structural reforms that people are all sitting which are possibly more important austerity in the where aiming to boost long-term growth potential ... um this will take years to subdue Lipper but in the meantime it's ... the costs of the Eels are rising pleas for pro countries this can take it all buttressed with the other was ... that it paid out small ... to run the backstopped absolutely and also the lack of growth will mean that the Jeanine gets longer in any case ... austerity will lead people but on austerity I mean which may result in his ... speech and retail sales across the region that the bomb was down zero point seven percent on the month I mean that suggests head that ... you know there's nobody growing and nobody's going to help with wealth in approvals What's body was telling them not to dismiss them ... exactly know we we descended risk and it's something of a vicious spiral ... when Austerity Jenkins groups ... that needs to more concerns which are the bomb deals with stand out from scratch again ... I'm starting to ... get out of this pile because of the moment nobody seems to be actually preparing themselves for a will that that there are three show us the first is also AirSea and it seems impossible to avoid the mantra we went into crisis ... the second week in global them on this summer ... with the crisis with the people of the screen that ... the coffee table ... book but it seems like that the market is that I'm willing to to consider ... people back to the mustard seed that will simply result in ... a financing crisis ... um ... we could live on the mom's the Europe come too much for my six when it was all the debt crisis and that that is still believe that we need to call ... which is to try and find some form of cushion ... that will allow trying to structural reforms take effect ... Ryan on show will BYD's it may be new money from outside the euro sign that seems to be at the moment is the side of that fall into the shelves when we told you might be too much height and dances obscenely just one ... of the case of the Smead needed engine of growth ... the Gold economies and providing well there are areas the pockets of the party's helm of South America ... but ... this really was treated using his and his is up on what ... exactly is the problem for the year is a is a loss closed economy trades with itself ... I'm the one bright spot is Gemini almost a week goes to me and it's also the Barnes spoke in terms of being the one government that could potentially ... be engage in some fiscal boosting the budget deficits it's coming on the one percent of GDP this year ... they have tremendous effect on Cisco's listed in Gemini was that stimulate ... its economy ... and basically provide some engine of growth for the whole of the eurozone ... then things might actually improve pricing match in the midst of it since that time and way of life because ... that would be seen as captain coach inflation this is a tremendously difficult problem which is the solutions that might work ... on solutions that are basically unacceptable ... it's difficult to see ... him in any case if even if Germany ... what's cut taxes when German consumers do ... what they say that what they spend ... all the option could be seen as does Gemini on or about deflation or save the